“You’d think the first place you would go would be American producers, rather than OPEC, which literally held this country hostage for decades because they were our top supplier,” API President Mike Sommers told CNN Business.
In response, a White House official stressed the importance of “reliable and stable energy markets at this critical moment” in the global recovery from the pandemic.
“President Biden has made clear that he wants Americans to have access to affordable energy, including at the pump,” the US official told CNN Business.
Goldman Sachs: Biden’s OPEC+ outreach unlikely to work
The Biden administration on Wednesday called on OPEC+ to do more to combat elevated energy prices. National security adviser Jake Sullivan said in a statement that OPEC+ “must do more to support the recovery.”
In a note to clients on Thursday, Goldman Sachs strategist said the White House’s outreach to OPEC+ is “unlikely” to persuade be effective in the short term. The Wall Street firm cited concerns about weakening demand caused by the Delta variant.
Fossil fuels crackdown
The API, which has a vested interest in domestic energy production, said unleashing US oil producers would be a better solution.
And Sommers criticized the Biden administration for its regulatory crackdown on the fossil fuels industry.
“The irony sure is thick,” Sommers said. “We’re talking about an administration that really for the first eight months in office did nothing but try to restrict American development of oil and gas.”
“I’m not saying what Biden has done in the first eight months is the only reason we are seeing high prices today,” Sommers said. “There’s no question there are significant market forces at play.”
Sommers conceded that the leasing pause, which the API strongly opposed, is not impacting today’s prices. Instead, he said, that move — along with the cancellation of the Keystone XL added regulatory uncertainty that will discourage future investment in domestic energy.
Why US oil producers aren’t coming to the rescue
But regulation is not the only reason US oil production has been somewhat slow to rebound from the pandemic.
After burning through insane amounts of money last decade, oil companies are under enormous pressure from Wall Street to be more retrained and share profits with shareholders. They’re in no rush to come to the rescue.
“This has been an underperforming asset class,” Sommers said. “There is fiscal discipline occurring in the oil patch today. The focus is on returning money to investors who lost a lot of money in the past decade, particularly in 2020.”
Of course, the Biden administration’s tougher approach on the oil-and-gas industry is being driven by a sense of urgency around the climate crisis — especially after four years of gutting environmental regulations during the Trump era.
The White House official stressed that gas prices are lower today than they were for most of the first half of the decade and are in line with 2018 — the middle of the Trump administration.
“But we have to stay vigilant,” the official said.